More than half of Chinese investments in Europe are in the Western Balkans

Economic underdevelopment and reduced democratic capacities, as well as the reserved and insufficient presence of the European Union and the United States of America, enabled China to position itself as an important factor in the Western Balkans.

This was assessed at the presentation of a study by the Digital Forensic Center (DFC) on China's presence and influence in the region.

The analysis states that the Balkans represent a springboard and a bridge for China to establish a more significant economic presence in Europe.

It is emphasized that the strongest influence of China is visible in Serbia, and that Montenegro is one of the eight countries most threatened by the Chinese presence.

China made a strong start with investing in North Macedonia, but failed to maintain significant influence.

In Bosnia and Herzegovina, that is, in the Republic of Srpska, there is a large number of Chinese investments in infrastructure.

The only country in the region that records a decline in Chinese investments is Albania.

China in the Balkans

According to the data provided in the study, more than half of the investments of Chinese companies in Europe are actually stationed in the countries of the Western Balkans.

The impact of the Russian invasion on Ukraine
However, the DFC analysis specifies that Chinese activity in the Western Balkans region was made more difficult after the Russian invasion of Ukraine, because that war united the EU countries and strengthened their partnership with the USA.

This, they believe, along with cooperation with NATO, will make it difficult for China to achieve its long-term goals in Europe.

The long-time ambassador of Montenegro, Milica Pejanović Đurišić from the Atlantic Alliance of Montenegro, assessed that Russia's aggression against Ukraine tested the strength and limits of the Chinese-Russian partnership:

"Although both countries oppose the international order, Beijing stands for a modified but stable system, while official Moscow insists on its aggressive demolition."

Chargé d'affaires of the US Embassy in Montenegro, Chris Karber, assessed that instability in the world suits China, in order to change the international order.

"China is the only country that has the intention of reshaping the international order and the increasingly strong economic, diplomatic, military and technological power to do so," said Kaber.

Among the Chinese investments in Montenegro, he highlighted the construction of the first section of the Bar-Boljare highway and the ecological reconstruction of the Pljevlja thermal power plant.

"Given that Montenegro is trying to attract foreign investments, we must keep in mind that its open investment climate, economic sensitivity to external shocks and large debt to China will represent significant risks," said Karber.

He stated that the foundations of the international order are under permanent challenge due to the Russian invasion of Ukraine, which has consequences for the entire world, regardless of the fact that the President of Russia, Vladimir Putin, has failed to achieve any of the strategic goals:

"Instead of destroying an independent Ukraine, he strengthened it. Instead of dividing NATO, he united it. Instead of proving Russia's strength, he weakened it. In order to weaken the international order, he rallied countries to defend it."

The rise of China is a challenge for the USA and the EU

Milica Pejanović  Đurišić from the Atlantic Alliance said that by trying to reshape the current world order, China has the ambition to become a leading global power, which is a challenge for the United States of America and the European Union:

"It is a country that does not share the same democratic values and that stifles human rights and basic freedoms."

Pejanović  Đurišić emphasized that the foundations of Chinese activity, especially in the Balkans, are present through the global initiative "Belt and Road" as well as the forum "16+1" (16 countries of Central and Eastern Europe plus China).

"It is essentially an attempt to reshape the current world order, based on the concept of liberal democracy, in the direction of adaptation to China's national goals and strategic interests," she states.

In addition to the economic one, she noted, China is trying to strengthen its presence through political cooperation with the Balkan countries.

Lack of transparency in Serbia
According to Milan Jovanović, chief analyst of the Digital Forensic Center, China's cooperation with Serbia is achieved through investments, loans, culture and education, and the security sector.

Thanks to the direct support of politicians and the media, China was presented as Serbia's most important strategic partner.

In Serbia, in the last decade, at least 61 projects have been identified in various stages of completion by or in cooperation with Chinese actors, the value of which is at least 18.7 billion euros.

The lack of transparency, says Jovanović, is something that characterizes almost all Chinese projects in Serbia:

"Belgrade's political commitment to China enabled economic influence, as the main tool of Chinese action, to flourish in that country.

Montenegro is at risk

According to the report of the Center for Global Development, Montenegro is among the eight countries most threatened by the Chinese presence, said Jovanović, specifying that it was placed alongside countries such as Laos, Mongolia, Tajikistan, Kyrgyzstan and Pakistan.

In the previous seven years, Jovanović said, the share of capital participation from countries with authoritarian, hybrid regimes increased, with an obvious decline in investments from democratic and Western countries.

In Montenegro, the most important project is the first section of the Bar-Boljara highway, the completion of which is expected this year.

According to the DFC, the credit arrangement with the state-owned Chinese bank of almost one billion euros caused numerous controversies due to lack of transparency.

DFC states that Montenegro, as a candidate country for EU membership, due to weak and politicized institutions represented an opportunity for China to position itself in a strategically important country with a port and access to the EU market.

"As a new member of NATO, with a relatively weak institutional capacity, Montenegro is strategically an ideal target for the expansion of Chinese influence in Europe," states the DFC report.

BiH is the second most important project of Beijing

Along with Serbia, Bosnia and Herzegovina is the second country where China has made the most significant economic and political influence in the Western Balkans. DFC has identified 29 Chinese projects worth over five billion euros, of which a large number of investments in the energy and transport sectors are in the Republic of Srpska.

"The political and economic connection between the RS and China is logical, given that the political situation in Serbia directly spills over into the Republika Srpska," according to the DFC study.

According to DFC, these, as well as Chinese projects in Serbia, are accompanied by non-transparency and potential corrupt practices.

China limited in North Macedonia and Albania

In North Macedonia as well, China has started investing strongly, and the value of 15 projects there is almost 655 million euros. Other Chinese projects in North Macedonia are mainly donations in the field of health and education.

According to the DFC, Albania is one of the few countries in the region where Chinese investments have declined in the last five years.

DFC estimates that the level of credit offered by China can reach 18 percent of GDP in Montenegro, 12 percent in Serbia, 10 percent in Bosnia and Herzegovina and seven percent of GDP in North Macedonia.

The DFC concludes that the EU's new economic and investment plan for the Western Balkans of 3.2 billion euros is a good response to China's penetration into the region. However, the dilemma remains as to whether this plan will represent a sufficient stimulus and encourage states to completely refrain from riskier partnerships with third parties.